Introduction to Financial Management Explain What is Financial Management

Estimation of Capital Requirements
Estimation of Capital Requirements:

• A finance manager has to make estimation with regards to capital requirements of the company.
• This will depend upon expected costs and profits and future programs and policies of a concern.
• Estimations have to be made in an adequate manner which increases earning capacity of enterprise.

Some of the important financial statements are:
Important Financial Statements
Cash Flow Statement:
A financial statement that details excess of cash revenues over cash outlays excluding non-cash expenses in a give period of time
Balance Sheet:
A record of financial situation of a firm on a particular date by listing its assets and the claims against those assets
Income Statement/Profit & loss Account:
A financial statement that gives operating results for a specific period
Raising of Funds
Following are the main functions of a Financial Manager:
Let us look at each in detail.
Allocation of Funds
Raising of Funds
Profit Planning
Understanding Capital Markets
Raising of Funds
Raising of Funds:
In order to meet the obligation of the business it is important to have enough cash and liquidity.
A firm can raise funds by the way of equity and debt.
It is the responsibility of a financial manager to decide the ratio between debt and equity. It is important to maintain a good balance between equity and debt.
Tax Reporting in Financial Management
Details of state and local requirements can be obtained from the state’s department of revenue and local officials.
An organization must remit personnel income tax to the IRS on a monthly basis. State and local remittance requirements and schedules may vary.
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